Let us talk about something very fundamental to the goal of becoming rich. Today, a fresh college graduate will earn an average of $42,000 upon graduation  with a range of $22,000 to $55,000 for most common professions. That is a good salary, especially given that the median salary of a US household is $41,000 as of 2004. However, $42,000/year does not classify you as rich! Even if you are earning twice that, i.e. $84,000, it still does not make you rich. And what is worse, the life that is projected to us via television advertisements, movies and newspapers is not a life that a majority of us can afford! Does that surprise you? We are talking about:

• Owning your own home
• Driving a new car
• Going to nightclubs regularly
• Vacationing in beautiful locales
• Frequent upgrades to our wardrobes

Loans & Debts
All this sounds ordinary, and perhaps even as something that we should be able to do- but the reality is quite different. We often have to go into debt of the worst kind, consumer debt, to actually sustain that type of lifestyle. A loan for a home, a loan for a new car, credit card debt for vacations and clothing, and of course, the student loan for college education has all become an accepted part of our culture. Anything less is considered incompatible with a successful life.

And then to fulfill the payment obligation for all those loans, we sing "We owe, we owe, so off to work we go"! We now need a high-income to make all those monthly payments, and are now truly caught up in the rat race, no longer masters of our destiny. We cannot take a chance at that low-paying, but exciting opportunity, for we need that income; layoffs scare the daylights out of us, for it won't be easy to replace that income; we cannot even start our own gig, hey, those bills are killing us!

Frugal
The lesson here is simple, and should we say, this is the first tip, the most common but the most powerful of all:

Live Below Your Means!

Let us upgrade that and say:

Live WELL below your Means! Live FRUGALLY!

Live at 50% of your take-home if you can, at 40% if you can, but surely at no more than 80% of your take-home paycheck. If you do not have an income at the moment, but are using either loan money or savings for living expenses, then allocate a monthly expense amount and live within 80% of it. This is good practice and will help you build real wealth very quickly even as your earning capacity grows!

The "b" word
To check whether you are actually living within your means, you may need to do a budget.

We are not fans of budget on an ongoing basis, but we are big proponents of it at least until you get a handle on where your money is going! So to kick off this effort, record where each dollar (nay, each cent!) is going, and thus know, for each paycheck you get, where every penny is ending up. Do this before making any modifications to your lifestyle- that will tell you what changes will give you the most benefit. Sometimes you may be surprised as to where those dollars end up!

Do a budget until you get a hang of where the money is going!

We will leave you with the above thoughts and tip, and hope you will take action on them. We will be back next week, with more tips to help smooth your path to greater riches. We welcome your feedback at feedback@characterandwealth.com.